Future of leveraged transactions in China

How foreign buyers can use leverage when taking over a listed Chinese company.

The requirement for a high level of leverage is neither unusual nor taboo in China. However, most of this activity has been in the context of transactions generating tangible assets such as new plant and infrastructure. This is now extending to structured transactions designed to finance assets such as loans, rentals and trade receivables.

In China, however, the exuberance for leverage has not so far reached corporate takeovers. It is one thing for the government partially to divest its holdings...